Business & Market Intelligence

Venture-backed companies in US Account for 17% of GDP and 10 million Jobs: Study

U.S. companies that received
venture capital from 1970-2005 accounted for 10 million jobs and $2.1
trillion in revenues in 2005, according to a study conducted by Global
Insight for the National Venture Capital Association (NVCA). This
represents 9% of the total private sector work force and 16.6% of total
U.S. GDP. Venture investment itself represents just 0.2% of U.S.
GDP.

The study found that
venture-backed companies also outperformed their non-ventured counterparts
between 2003 and 2005 with a 4.1% compound annual growth rate in jobs and
an 11.3% compound annual growth rate in sales versus total private sector
growth rates of 1.3% and 8.5% respectively.

Some of the nation’s best
known venture-backed companies include FedEx, Intel, Cisco, Starbucks,
Genentech, Google, eBay, Apple and Home Depot.

Computers/Peripherals - Venture-backed
companies dominate the computers and peripherals industry, accounting for
nine out of every ten jobs (1.9 million) in the sector. These
companies recorded the largest revenue totals at $466 billion in
2005 – nearly 70 percent of the total industry’s revenue generation.

Software - The
2005 employment data show a heavy concentration of venture capital
supported jobs in the software industry as well, with nearly 860,000 jobs
– almost 90 percent of the total jobs in the sector. Venture-backed
companies recorded $210 billion in sales in 2005, which represents more
than 36 percent of the industry’s total revenues generated that
year.

Media/Entertainment/Retail
– The largest venture-backed
job creators are in the media/entertainment/retail industries, employing
more than 2 million people in 2005 which reflects more than half of the
entire industry’s employment. Venture-backed companies in this sector
contributed nearly $300 billion in sales in 2005.

Venture-backed Companies
Contribute to State and National Economies

While venture capital
investment generates jobs and revenue in every state, there are pockets of
the U.S. with strong levels of activity. California, Texas, Pennsylvania,
Massachusetts, and Georgia were the states whose venture-backed companies
contributed the most national jobs in 2005.

The study,
entitled Venture Impact: The Economic Importance of Venture Capital
Backed Companies to the U.S. Economy, was commissioned by the NVCA and
conducted by Global Insight, a leading economic analysis and forecasting
firm. Global Insight analyzed a database of nearly 23,500 U.S.-based
companies that received venture capital financing between 1970 and 2005.
From this database, Global Insight measured the employment and revenue
contributions of these companies to the national economy. The data was
further broken down by industry and by state.